Your Bank’s Statment Is Probably Wrong
Consumers who enter debt review receive a monthly statement from their Payment Distribution Agency (PDA). This statement outlines how their one monthly debt repayment has been split up among their credit providers. The PDA will make changing payments each month according to the Debt Counsellors restructuring plan and the consumer’s court order. These PDA statements also show a rough balance of the accounts and how much is still owing.
‘PDA statements also show a rough balance of the accounts and how much is still owing’
Consumers can, however, get worried when they get a statement from their credit providers which shows very different balances still owing compared to what the PDA statement says. The differences can be large. Why is that?
Since debt review began it has been an uphill battle to get credit providers to supply regular monthly statements to consumers under debt review. This was at first in part because the credit providers (1) were resisting debt review (2) couldn’t get their computers to accept the new payment arrangements due to poor inflexible and old programming and (3) were insistent that the original contract with consumers was still in effect even though a court had ordered something different.
‘it has been an uphill battle to get credit providers to supply regular monthly statements to consumers under debt review’
For many thousands of consumers, this meant that they only had info from their PDA (a rough estimate) and nothing from their credit providers. Later, when they were able to finally get info from their credit providers, most were horrified that the balances that showed as owing had gone up because of how bad the credit provider’s computer was working out things. The computers, which could not account for the new arrangement (which by law had to be captured within 10 days of the court order), were adding lots of bogus penalty fees and charges. Many computers were still working things out at old interest rates even where the credit providers debt review departments had happily lowered their rates and agreed to drop certain types of charges.
Having built confidence and having dealt with their credit providers for many years compared to their Debt Counsellors only for a few short months, consumers grew worried that they were being scammed or that the Debt Counsellor was not doing their job. This was of course, not true. The fault normally lay with the credit providers calculations (not the debt review departments even, just the computers. Those working in the credit provider debt review departments really wanted to help).
This meant that from time to time (especially when accounts were finally paid off according to the court ordered repayment structure, which credit providers simply ignore for the most part), the Debt Counsellor had to make contact with the credit provider and argue back and forth about the actual balance remaining. Agreements which were made in the industry tended to always favour the credit providers who need their computers to be able to balance their books.
Over time things have improved but there are still often issues relating to bogus charges and fees. For example, one debt review consumer faced R86 000 in incorrect interest calculations and a simply insane R220 000 in extra credit life premiums. Can you imagine checking the balance on your account which you think should be paid up and finding that you now supposedly owe an additional R300 000+? You would probably freak out and panic.
After Care Fees To Debt Counsellors Are Worth Paying
Each month consumers pay an after care fee to their Debt Counsellor which is like a retainer and covers the costs that come with keeping their debt review going. In the case of the debt review consumer from George, his Debt Counsellor (who was receiving the monthly after care fee) started checking the bank’s calculations and found lots and lots of errors and mistakes. They found out that the bank had been working out the interest calculations wrong and had added R86 000 in fees that they had to reverse. The bank had also made a weird mistake and had been adding a fee which the consumer agreed to pay once off when they took on the credit (of R 8484 for credit life insurance) every single month. This mistake had supposedly added an additional R220 000 to the consumer’s balance.
‘This example just goes to show the benefits that consumers get from paying their monthly aftercare fees to their Debt Counsellors’
After some back and forth the bank eventually agreed to correct their mistake and sort things out. This example just goes to show the benefits that consumers get from paying their monthly aftercare fees to their Debt Counsellors (some people mistakenly think they don’t need the Debt Counsellors help once the process is up and running).
The consumer had originally tried to get the bank to correct the mistakes but it was only with the help of the Debt Counsellor and his efforts that the matter was resolved in favour of the consumer.
If you are under debt review, you have a right to get a statement from your PDA (make sure you keep them up to date with your latest contact info) and also from credit providers. You can walk into a branch or go online and get a statement and check that they have adjusted things to match your court order. If not, don’t keep quiet. Ask your Debt Counsellor to assist you in sorting that out. If you are not getting a monthly statement then you can even go to the National Consumer Tribunal (NCT) and compel the credit provider to cooperate and obey the law.
If you are under debt review and get a statement which shows figures very different to the approximate balances shown by the PDA statement then don’t panic. It is quite likely the credit provider is at fault and your Debt Counsellor will help you to sort it out.